Square Off in Trading

 

Trading may be a long-term investment that offers significant returns over time or a short-term approach that yields rapid profits. Intraday trading, often known as day trading, is one similar short-term strategy. You’re probably thinking what a Square Off is. No worries, we’ll go through this matter in detail and answer any questions you might have.

Square Off in Trading

Squaring off is an Intraday strategy in which an investor or trader acquires or sells a certain quantity of an asset (usually shares) and then reverses the trade subsequently within the day in the hopes of gaining (change in pricing after stockbroker fees and taxes).

Example of Square Off in Trading

Trader X uses a broker to purchase 100 stocks of Liberty from the NSE at a price of Rs 10 per stock. Trader X sells all of the stocks later that day for Rs 12 per stock plus Rs 10 in brokerage fees. H makes a net gain of Rs (200-10)=Rs 190. As a result, the trader’s position has essentially been squared off.

Square Off Meaning

The objective of the square-off position is to complete the trades. This implies that any intraday transaction stocks you bought or sold in the morning must be sold or bought back before the market closes.

If you choose not to sell such stocks or shares, your Stockbroker will do it on your behalf. Between 3:15 pm to 3:20 pm, most stock brokers automatically square off the trades.

How to Square off the position?

In trading, squaring off an existing transaction, putting a Sell order for a Call option, and putting a Sell order for a Put option are all the same. It’s simple to do via the app or on any brokerage platform.

Similarly to placing a BUY order for a call option by holding the click over the ‘BID Price’ section of the strike price, one may make a SELL order by holding the thumb over the ‘Ask Price’ section of the strike price.

The order form displays on the window when you press the button. Specify the requested information and press the SELL button.

Square-off Timing

After Understanding Square Off in Trading let’s take a look at the timing for it. Between 03:15 pm and 03:20 pm, all stocks and F&O holdings are instantly squared off by most of the brokerages.

While currency futures’ square of point is at 4:45 pm to 4:50 pm in most of the brokerages.

Holdings on the MCX are squared off 30 minutes before the market closes. As a result, their square-off time falls around 10:35 pm and 11:20 pm.

What is the difference between square off and exercise an Option?

Squaring off is when you take the exact opposite of your current posture.

Let’s imagine you have a BUY Call Option position on Reliance. You’re squaring off your position if you SELL Put Options on Reliance with the same strike price, lot size, and expiry.

When you exercise an Option, you are requesting delivery of the Option’s underlying stocks, commodities, or cash.

Auto Square-off

Auto Square off
Auto Square off

If you do not close your open positions before the deadline, the platform will immediately square them off at the current market pricing. To prevent this, make sure to close your positions ahead of time.

Auto Square off Charges

If Broker auto squares-off your open positions, you will be fined from INR 20 to INR 50  (plus 18 percent GST) depending on the broker for each order as auto square-off costs. The RMS squad squares off at the normal intraday square-off times.

As a result, square-off your spots ahead of time to prevent auto square-off costs. While squaring-off your open trades, you’ll also need a decent time margin and a reliable internet connection.

Sell Off

A sell-off occurs when investors sell a large number of securities in a short period of time. There is no clear criterion that distinguishes a sell-off from the commencement of a bear market. Instead, it’s a catch-all term for a moment when investors are more willing to sell than to acquire.

Stock Market Timings

It’s important to understand market timings to prevent auto square-off costs. The market opens at 9:00 a.m., and cash, stock, F&O trading begins at 9:15 a.m.

As a result, before 3:15 p.m., you can square off your spots. Not only will this eliminate auto square-off costs, but it will also assure profits (Because auto square-off occurs at the current market rate, it may or may not be favorable for the investor).

Broker’s Risk Management team determines the square off % for MTM, or Mark To Market. The RMS squares off the client’s whole position if the MTM with Broker reveals the presence of cash margins that exceed 40% to 70%.

Conclusion

When trading intraday, it’s important to have sufficient time on your hands. It not only ensures the required earnings, but it also saves the payment of needless fees.

Furthermore, ensure that the platform you are trading on (mobile, laptop, or PC) is up to date and attached to a reliable connection.

This is all from our side regarding Square Off in Trading. However, if you have any doubts you can just comment below.

Other Interesting blogs related to Square Off in Trading.

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FAQ

Square Off in Trading - FAQ
Square Off in Trading – FAQ

Square off Meaning in Trading in Hindi?

स्क्वायर ऑफ पोजीशन का उद्देश्य ट्रेडों को पूरा करना है। इसका तात्पर्य यह है कि आपके द्वारा सुबह खरीदा या बेचा गया कोई भी इंट्राडे ट्रांजैक्शन स्टॉक बाजार बंद होने से पहले बेचा या वापस खरीदा जाना चाहिए। यदि आप ऐसे शेयरों या शेयरों को नहीं बेचना चुनते हैं, तो आपका स्टॉकब्रोकर आपकी ओर से ऐसा करेगा। दोपहर 3:15 बजे से दोपहर 3:20 बजे के बीच, अधिकांश स्टॉक ब्रोकर अपने आप ट्रेडों को बंद कर देते हैं।

Square off meaning in Hindi?

स्क्वेरिंग ऑफ एक इंट्राडे रणनीति है जिसमें एक निवेशक या व्यापारी एक निश्चित मात्रा में संपत्ति (आमतौर पर शेयर) का अधिग्रहण या बिक्री करता है और फिर लाभ की उम्मीद में दिन के भीतर व्यापार को उलट देता है (स्टॉकब्रोकर शुल्क और करों के बाद मूल्य निर्धारण में परिवर्तन)।

Square off meaning in Zerodha?

Square off implies that any intraday transaction stocks you bought or sold in the morning must be sold or bought them back before the market closed. If you choose not to sell such stocks or shares, your Stockbroker will do it on your behalf. Between 3:15 pm to 3:20 pm, most stock brokers automatically square off the trades.

What is square off in intraday?

Square off suggests any intraday transaction stocks you bought or sold in the morning must be sold or bought back before the market closes. If you choose not to sell such stocks or shares, your Stockbroker will do it on your behalf. Between 3:15 pm to 3:20 pm, most stock brokers automatically square off the trades.

what is square off in stock market

square off in stock market indicates that any intraday transaction stocks you bought or sold in the morning must be sold or bought back before the market closes. If you choose not to sell such stocks or shares, your Stockbroker will do it on your behalf. Between 3:15 pm to 3:20 pm, most stock brokers automatically square off the trades.

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